| Nygaard has recovered over $100,000,000 of
par value for investors left holding illiquid
auction rate securities.
What can she do for you?
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 Strict laws require sellers of
securities-all manner of investments-to disclose all
material facts when selling an investment. The laws
also provide for rescission of the purchase with a full
refund, attorneys fees and interest. In addition, if
the security has been sold, the law provides for
compensation in the amount of losses, interest, and for
lost profits. If fraud of a breach of a fiduciary duty
exists, punitive damages can be claimed. I have
arbitrated three cases in which the arbitrators awarded
punitive damages in addition to compensatory damages to
investors.
Diane Nygaard, P.A.
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| If you or a loved one has been harmed by your
financial advisor, please contact us today.
We'll evaluate your claim and, if we think you
have a strong claim, pursue it vigorously. |
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Quick Links:
Securities Litigation &
Arbitration
Auction Rate Securities
Class Actions
Annuity and
Insurance Litigation
Representing Whistleblowers on Securities
Fraud
Excessive Fees by Mutual
Funds
 Securities Litigation & Arbitration
Representing Investors in Disputes with their Brokers or
Financial Advisors
> Churning or excessive trading in
their accounts
- Churning is also defined as excess trading in a
customer's account for the purpose of generating
commissions for the broker's financial benefit. In order to
prove churning, a customer must prove that the broker had
control over the account, that the trading was "excessive"
given the customer's investment objectives, and that the
broker acted recklessly (or intentionally) with the intent
to benefit himself to the detriment of the customer. In
order to establish "control," a customer must show that the
broker was making the investment decisions, whether the
account is discretionary or non-discretionary.
> Material misrepresentations or
omissions
- Under most states' securities laws, as well as the
Securities Exchange Act of 1934, a broker may be liable to
a customer if (s)he intentionally or recklessly misleads an
investor or fails to disclose material facts about an
investment.
- These claims are often decided on three different issues:
(1) the documentation maintained by the customer and
broker; (2) the credibility of each; and (3) the
sophistication of the investor.
> Breach of Fiduciary Duty
- In many states, and in certain circumstances,
stockbrokers and financial advisors owe their clients the
duty of a fiduciary, which is defined as a duty of utmost
good faith, integrity, and loyalty.
- Registered Investment Advisers and ERISA plan
administrators owe their clients a fiduciary duty under the
laws that govern their activities.
>Unsuitability
- A broker or financial advisor must have a reasonable
basis for believing that an investment recommendation is
appropriate for the customer based on his or her investment
objectives.
- The NASD and NYSE require brokers to "know their
customer," which includes knowledge of the customer's risk
tolerance, other investments, net worth, financial needs,
and investment objectives.
> Unauthorized Trading and Failure to
Follow Instructions
- These claims usually involve a broker trading in a
customer's account without the customer's knowledge and/or
permission. In a securities account where the customer has
not given the broker permission to make trades in the
account, if the broker makes a trade without obtaining
permission, the broker may be liable for losses related to
the trade.
- These claims require the customer to be diligent in
reviewing account documents, such as statements and
confirmations, because the statute of limitations often
runs from the date the customer receives these documents.
Examples of stock broker misconduct include:
(1) unsuitable recommendations, including brokers who
over-concentrated their customers' accounts in high-tech
stocks;
(2) mutual fund switching;
(3) the improper use of margin to increase the buying power of
an account;
(4) pension and retirement account mismanagement;
(5) stock manipulation and pump and dump schemes;
(6) day trading fraud, internet scams, and pyramid schemes;
and
(7) insurance company pricing and sales practices fraud.
The SEC has okay'd all-public arbitration panels. Click here to read more about this
significant change in the arbitration process.
Auction Rate Securities
 Many brokerage firms sold "Auction Rate
Securities" to individuals, corporations and pension plans as
being safe and liquid cash equivalents. However, in February
2008, the group of broker/dealers supporting the "auctions"
backed away and billions of dollars of savings were frozen.
As a result, investors have been saddled with investments
that are neither as liquid as cash nor as safe as cash.
Diane Nygaard has represented over 100 individuals,
businesses, trust and pension accounts that were sold illiquid
ARS. To date, she has recovered over $100,000,000 of par value
for investors left holding illiquid auction rate securities.
She has filed FINRA arbitrations against Oppenheimer,
Ameritrade, Morgan Keegan, Merrill Lynch, Morgan Stanley,
E*TRADE, UBS and other banks and investment firms who sold
people the auction rate securities. She continues to represent
investors with ARS in pending arbitrations. To date, all ARS
clients have received all their par value and attorneys' fees.
There is no guarantee of such success as to all future
cases.
We are still accepting new auction rate securities cases,
including those where the account has moved from the brokerage
firm that recommended them. The auctions failed almost three
years ago-arbitrations should be promptly filed.
The following articles discuss some of the issues related to
Auction Rate Securities:
Class Actions
 When many individuals suffer damages
from a common wrong, a class action can obtain relief for a
class of people. Cases involving price movements in a stock, a
course of misconduct by the same broker or brokerage firm, or
by an insurance company and its agents are typically handled as
class actions. Diane Nygaard has served as one of lead counsel
in many class actions arising under federal and state
securities and consumer fraud statutes.
Annuity
and Insurance Litigation
 With two major bear markets in the last
decade, many investors have decided to avoid the stock market,
and try to limit their risk. This has made possible the
explosion in annuity and other insurance product sales. Another
factor is at work: the commissions received by brokers who sell
annuities are very high, ranging from 7% to 13% of the face
value of the annuity. Very few investment products pay brokers
this well. Load based mutual funds pay, on average, 4% to the
registered representative. Stock or bond sales usually pay the
representative less than one percent, as do the "managed
accounts" that have become so popular with stockbrokers.
Therefore, because of these high commissions, the insurance
companies have incentivized brokers to sell a product that is
not a good investment for most people. This also explains why
so many annuities are bought for IRA accounts, which are
already tax-deferred, and should not be used to buy annuities.
Insurance sales positions have lower barriers to entry than
brokerage firms. Unfortunately, many former brokers who are no
longer allowed to sell securities become "financial planners,”
holding only an insurance license. They use free lunches and
fear tactics to sell high commission annuities.
A second problem with annuities from the investor's
perspective is that annuity expenses are extremely high.
Investors pay an annual management fee, just as they do in a
mutual fund. However, annuities have an extra layer of fees. In
addition to the annual management fee on the portfolio, there
is a "mortality and expense risk" fee, typically 1 percent or
more per year. This is why the average fee on money held in
annuities is over 2% per year. This means that over 10% of the
amount invested in an annuity goes to fees after just five
years--in addition to the initial commission "off the top".
Diane Nygaard has extensive experience representing
investors in litigation, including several class actions
against insurance companies, arising from racially
discriminatory pricing of life insurance, misleading sales
presentations of annuities and other life insurance
products:
- Kippes, et al. v, Knights of Columbus et al.;
Civil Action No. 96-C-4789, District Court, Sedgwick
County, Kansas, and related cases, (settled for $23,000,000
on behalf of a class of policyholders sold "vanishing
premium" policies).
- In Re Lutheran Brotherhood Variable Insurance Products
Co. Sales Practices Litigation, Case No. 99MDL 1309
PAM/JGL; (settled for $40,000,000 on behalf of
policyholders sold life insurance as investments and
vanishing premium policies).
- McCallup, et al. v. Metropolitan Life Insurance
Co., U.S.D.C., S.D.N.Y., No. 01-CV-2090, (case settled
for $125,000,000 on behalf of minorities to whom high cost
life insurance was sold).
- In Re Industrial Life Insurance Litigation, MDL
No. 1371 & 1382; (settled for $80,000,000 on behalf of
minorities to whom high cost life insurance was sold).
- Ireton v. American Family Life Ins. Co., Case No.
97-C-1184 (E.D. Wis. Oct. 6, 1999); $75,000,000 settlement
for misrepresented sales of “vanishing premiums” life
insurance.
- Brown, et al. v. Phoenix Home Life, $1,600,000
settlement for a group of AT&T employees defrauded by
an insurance agent.
- Robert and Nancy Simpson et al. vs. New England Mutual
Life Ins. Co., U.S. District Court for the Western
District of Missouri, Case No.: 98-1190-CV-W-1,
$200,000,000 settlement for misleading sales of life
insurance products to a class of all American policy
holders.
Representing Whistleblowers on
Securities Fraud
What should you do if you know that a company executives are
fraudulently stating the company’s profits, or if you
know of an insider who has traded stock on non-public
information? Until recently, a person could have contacted a
state securities department, or the SEC, both of which are
underfunded and widely acknowledged to have been behind the
curve in enforcing securities laws. Even the General Counsel of
the SEC was able to hide his own profits from Madoff until he
was publicly exposed. Why would someone step forward?
Now, however, there’s a good reason to be the first to
tip off the SEC. The Dodd Frank Act now requires the SEC to
hire more people to investigate tips of fraud. Also, someone
who gives the SEC “original information” about a
securities fraud will share in any recovery by the SEC. The Act
requires that the “whistleblower” receive 10 to
30% of the amount recovered, which, in a large Enron-like or
Madoff-like case, would be millions of dollars. Borrowing the
IRS’ approach, the SEC is gearing up to pursue reports
of fraud immediately and effectively. A whistleblower, however,
needs to follow the statutorily-required steps.
Contact Diane Nygaard to protect your rights and your
interests if you suspect securities fraud.
Excessive Fees by Mutual
Funds
Mutual funds have advantages for investors: they choose and
monitor stock positions, they allocate assets among various
sectors, and they minimize volatility. However, they also add a
layer of fees. Investors in mutual funds have to pay for their
services — and sometimes those fees are so high that
they make no sense for investors. If they are excessive, the
fees can be recovered by investors under Section 36(b) of the
Investment Company Act.
Morningstar is a mutual fund rating company. It ranks mutual
funds based on several factors — including their long
term and short term performance, but also based on their fees
charged to investors. It has given an “F” to
several well-known mutual funds because of their high fees. A
few months ago, the Supreme Court held that investors can try
to recover their mutual fund fees if, based on several factors,
those fees are unreasonably excessive. Investors holding the
following funds should contact a securities attorney for
information on class actions recently filed:
Calamos--Convertible & High Income Fund (Ticker: CHY)
Calamos--Global Dynamic Income Fund (Ticker: CHW)
Calamos--Strategic Total Return Fund (Ticker: CSQ)
Cohen & Steers--Reit & Utility Income Fund Inc (Ticker:
RTU)
Blackrock--Large Cap Growth
Blackrock--Mid-Cap Growth
Blackrock--Muniyield Quality Fund III, Inc (Ticker: MYI)
Cohen & Steers--Reit & Preferred Income Fund Inc.
(Ticker: RNP)
Harbor--International Growth
John Hancock--Classic Value
John Hancock--Lifestyle Aggressive
John Hancock--Lifestyle Balanced
John Hancock--Lifestyle Conservative
John Hancock--Lifestyle Growth
John Hancock--Lifestyle Moderate
JP Morgan--Growth Advantage
JP Morgan--Emerging Markets Eq Sel
JP Morgan--Investor Balanced
JP Morgan--Investor Growth
JP Morgan--US Large Cap Core Plus
Legg Mason--ClearBridge Aggressive Growth (SHRAX)
Legg Mason--ClearBridge Fundamental All Cap Value A (SHFVX)
Nuveen--Insured Municipal Opportunity Fund Inc (Ticker: NIO)
Nuveen--Municipal Market Opportunity Fund Inc (Ticker: NMO)
Nuveen--Premium Income Municipal Fund Inc (Ticker: NPI)
Nuveen--Performance Plus Municipal Fund Inc (Ticker: NPP)
Nuveen-- Quality Income Municipal Fund Inc (Ticker: NQU)
Royce--Low Priced Stock Svc
Royce--Micro-Cap Invmt
Royce--Value Plus Svc
Royce--Value Svc
Thornburg--Core Growth
Thornburg--Value
Wells Fargo Advantage--Common Stock In
Wells Fargo Advantage--Government Sec
Wells Fargo Advantage--Income Opportunities Fund (Ticker: EAD)
Wells Fargo Advantage--Multi-Sector Income Fund (Ticker: ERC)
Wells Fargo Advantage--Municipal Bond A
Wells Fargo Advantage--Opportunity Inv
Wells Fargo Advantage--Small Cap Value Inv
Wells Fargo Advantage--Total Return Bond
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